Vietnam Bonds Gain for Seventh Week on Rate Outlook; Dong Rises

Feb. 17 (Bloomberg) -- Vietnam’s five-year government bonds
gained for a seventh week on speculation interest rates will be
cut. The dong advanced.

The State Bank of Vietnam instructed lenders to “reduce
interest rates to levels that are suitable to the macroeconomic
situation,” according to a statement posted on its website on
Feb. 13. Inflation cooled for a fifth month in January, with
consumer prices rising 17.3 percent from a year earlier,
according to official data.

“The expectation is that the central bank will lower the
interest rate in the future,” said Nguyen Duy Phong, a Ho Chi
Minh City-based analyst at Viet Capital Securities. “In
conjunction with inflation slowdown, investors are heavily
investing in bonds.”

The yields on five-year notes fell 14 basis points, or 0.14
percentage point, this week to 12.23 percent, according to a
daily fixing from banks compiled by Bloomberg. The rate dropped
two basis points today.

The dong strengthened 0.2 percent this week to 20,833 per
dollar as of 3:54 p.m. in Hanoi, according to data compiled by
Bloomberg. The currency was little changed today. The central
bank set the reference rate at 20,828, its website showed. The
dong is allowed to trade as much as 1 percent on either side of
the official rate.